Main Takeways:-
- The economy contracted in early 2025, although hiring remained strong, mainly due to a sudden increase in imports caused by rates.
- Business confidence and consumer have been significantly reduced due to growing instability and inflation concerns.
- Financial markets are doing wrong because commercial problems and uncertain policies are altering investors and business leaders.
President Donald Trump said his second mandate in the White House is having a strong beginning in the past of the United States. The new economic numbers reveal a contrasting image.
The economy became smaller from January to March, the first time in three years. Experts say it is because many goods were brought early to avoid new rates. Even so, companies are hiring and prices are not increasing as fast as they did last year.
Household trust reports, business investment strategies and assumptions for sales, employment and economic expansion have been slowed dramatically. Experts said the tariff fight is the main reason why the president announced tariffs against commercial partners around the world.
Trump’s Tarifa Plan is directed to the commercial deficit
Throughout the campaign and its initial term, Trump promised to use import taxes to stop the commercial gaps, increase government income and bring relocated factory jobs to the United States. The rates introduced since the beginning of April are the highest barriers for foreign goods in more than a century, despite the fact that the government temporarily arrested some of the taxes announced on April 2.
These changes, together with warnings of more taxes in the future, have made companies both in the US and in other countries are not sure of the rules that could change at any time. The measure of the global commercial uncertainty of Bloomberg Economics is now much higher than during the first round of commercial conflicts.
Trump frequently points out the commercial deficit, which has accumulated more than 50 years, as evidence that the United States is being “deceived.” However, the first result of the new rates was a great increase in imports. Companies rushed to bring goods before prices rose, which caused the commercial gap to reach a record in early 2025. This import increase was so large that GDPs negatively impacted and caused a decrease in the economy during the first quarter.
Employment growth remains stable in the first quarter of 2025
The growth of employment continued at the beginning of the months of the year. Employers added 456,000 jobs between January and March, exceeding the predictions, and the unemployment rate increased a bit. “Large work numbers, much better than expected. It is already working,” Trump published on social networks on April 4, the day the March report came out.
However, future predictions do not match the previous data. Most experts in the private sector believe that the highest import taxes will increase the costs of foreign and national products, which leads to faster inflation. Surveys show that consumers agree, with the expectations of price increases during the next year and five years increasing significantly.
Retailers observed an increase in expenses at the end of last year and in the winter when buyers raised cars, computers and other high -price items before tariffs increased the prices they quote. At present, with households that are prepared for more clear prices and weaker growth, several consumer confidence measures have fallen to levels for the last time during the recession of the 2020 pandemic.
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